The Effect of Labour Unions on Investment in Training: a Dynamic Model

Abstract

Control over the amount of training required of new entrants is a potentially important tool available to many craft unions. This is often exercised through licensing based on schooling and apprenticeship requirements, and on passing special examinations. The standards are to a large extent determined and monitored by the incumbent practitioners. Thus physicians are required to train in various forms of schooling, internship, and residence for up to eight years. Architects need five years of schooling and three years of apprenticeship. Accountants require four years of college and one year of apprenticeship. Less widely known are the schooling and apprenticeship requirements of barbers, plumbers, and mine foremen, which require up to five or six years of investment. Finally, most craft unions require apprenticeship periods of two to four years (see Kolberg, 1976).

Support was provided by the Stanford Workshop on the Microeconomics of Factor Markets. Other research support was provided by the Center for Economic Policy Research, Stanford University, Stanford, California 94305, USA.

Helpful discussion with K. Arrow, G. Becker, P. Hammond, J. Pencavel, A. Robson, S. Rosen, J. Scheinkman, D. Starrett, Y. Tauman, R. Willis and C. Wilson is gratefully acknowledged. A shortened version of this work, using slightly different assumptions, appeared in Weiss (1985).